Prime Minister Julia Gillard has announced a major Cabinet reshuffle less than eight months out from the federal election, following the resignations of two senior ministers.

Attorney-General Nicola Roxon and Senate Leader Chris Evans are stepping down from their portfolios and will quit politics later this year.

Ms Gillard has used the opportunity to make wider changes to the Government frontbench, including moving Chris Bowen out of the Immigration portfolio to become Minister for Tertiary Education, Skills, Science and Research, as well as Minister for Small Business.

Mark Dreyfus, who is a Queen's Counsel and currently the Parliamentary Secretary for Climate Change, will replace Ms Roxon as Attorney-General.

Ms Gillard has paid tribute to her two departing ministers, saying both have done amazing things for the Government, the nation and the Labor Party.

"They have worked in critical portfolios and leave a proud legacy of Labor reforms which have helped create a stronger, fairer modern Australia."

An emotional Ms Roxon said it had been an honour and privilege to serve in such senior portfolios, and cited family reasons for her decision to stand down.

I want to make it very clear - I'm not leaving tired, sick or bitter. I'm leaving fit, healthy and confident in the future of the Government.

Senator Chris Evans

"I've been in Parliament since 1998 and a lot for me has changed personally in that time," she said.

"I hadn't even met my husband; my daughter was a long way from being thought about. If I did contest this next election and run for sixth term in Parliament, she would be starting high school before I might retire.

"All of us need to make decisions about the right time to leave and I believe the right time is now."

Ms Roxon will move to the backbench until retiring at the next election. The move will prompt a hotly contested preselection process in her Melbourne electorate of Gellibrand, which is Labor's second safest seat with a margin of 24.1 per cent.

'Fresh talent'

Ms Gillard says the departure of two senior ministers has given her the opportunity to promote some "fresh talent with fresh ideas".

"It means that we will be able to present to the Australian people a rejuvenated team as we move into the Parliamentary year in 2013," she told reporters in Canberra.

Mr Bowen, who is one of Kevin Rudd's strongest supporters, has been moved out of the Immigration portfolio, which is considered by some to be one of the most difficult positions in Government.

His new role will have a strong focus on education and training, something Ms Gillard says is at the heart of Labor's agenda for the future. His small business responsibilities will also give him an economic focus, something he has previously had and an area he enjoys.

It bears the resemblance to a plot from Home and Away rather than an adult government running one of the world's most important democracies and economies.

Liberal frontbencher Christopher Pyne

Brendan O'Connor will take on Mr Bowen's responsibilities for Immigration, while Mark Butler will add Housing and Homelessness to his existing portfolio of Mental Health and Ageing.

Mr Dreyfus has been catapulted into the Attorney-General's role, while Parliamentary Secretary Mike Kelly will enter the ministry and will be responsible for Defence Materiel.

Parliamentary Secretary for Trade Justine Elliot, who is also a supporter of Mr Rudd, has been removed from her role.

The Prime Minister says Ms Elliot requested the change because of conflict of interest concerns relating to an electorate campaign against coal seam gas, although backers of Mr Rudd dispute this.

Yvette D'ath will be responsible for Climate Change and Energy Efficiency, Kelvin Thomson will take on Trade, while Melissa Parke will work on Mental Health, Homelessness and Social Housing issues.

The past couple of weeks have been tumultuous for the Government, with Ms Gillard's "captain's pick" of Nova Peris at the expense of incumbent Senator Trish Crossin, fraud charges being laid against former Labor MP Craig Thomson, and the unusual decision to announce the election date nearly eight months ahead of polling day.

"This has been a horror start for the year for the Prime Minister and the Labor party," Liberal frontbencher Christopher Pyne told reporters in Adelaide.

"It bears the resemblance to a plot from Home and Away rather than an adult government running one of the world's most important democracies and economies."

But Ms Gillard says Ms Roxon and Senator Evans had been considering their future parliamentary service for more than a year, and the timing of today's resignations are sensible given Parliament resumes on Tuesday.

More resignations?

Mr Pyne says the Prime Minister's "alibi" about today's resignations does not stack-up.

"She says she's been talking to Nicola Roxon for 12 months about resigning from the Cabinet, and yet 12 months ago she was defeating Kevin Rudd in the leadership ballot and then appointed Nicola Roxon as Attorney-General."

Mr Pyne has also suggested, based on information from press gallery journalists, that more resignations are likely from the Labor frontbench and from Parliament.

Asked by reporters if she expected further resignations, Ms Gillard replied: "Colleagues come to me from time to time as Nicola and Chris Evans did.

"I don't have before me at the moment anybody who is saying that they want to leave at the next election other than people who have already publicly indicated that that's the case.

"I believe this is the team for the next election.

"Look, we live in a real world and you can never wholly discount that someone has a family circumstance, has an illness present."

Several lower house MPs have already indicated they will not recontest the next election. However, if any MP was to resign from Parliament before then, it may create the need for a by-election.

The decision on whether to hold a by-election would ultimately be taken by the Parliamentary Speaker.

"Common sense would tell you - and indeed history tells you - that when you are close in to the normal time for an election, it might well suit the convenience of the people to not be required to go out and vote twice... but these are decisions for the Speaker," Ms Gillard said.

Mr Pyne believes this is the real reason why the Prime Minister announced the election date so far out.

"I firmly believe now... that the Prime Minister called the election on Wednesday for September 14 because she wants to be able to say if anyone resigns that there'll be no by-election and the election will be on September the 14th."

"That is cruelling the Australian democracy, she is denying Australians their chance to be represented in the event that any of those Members resigns."

Who is going where?

Out

Chris Evans

Chris Evans steps down as Labor Senate leader and resigns from Cabinet, effective in the next couple of months.

Nicola Roxon

Ms Roxon moves to the backbench and will not be contesting this year's federal election, creating a vacancy in her safe Melbourne seat of Gellibrand.

In

Mark Dreyfus

Mark Dreyfus will replace Ms Roxon as Attorney-General and Minister for Emergency Management, relinquishing the role of Cabinet Secretary.

Mike Kelly

Mike Kelly enters the Ministry as Minister for Defence Materiel.

Jason Clare

Jason Clare takes on the role of Cabinet Secretary and retains Home Affairs and Justice.

On the move

Chris Bowen

Chris Bowen will replace Senator Evans as Minister for Tertiary Education, Skills, Science and Research. He will also have responsibility for Small Business.

Mark Butler

Mark Butler takes on Housing and Homelessness.

Brendan O'Connor

Brendan O'Connor will become Minister for Immigration and Citizenship.